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Investors Target Newly Public U.K. Company on Pay, Diversity

(Bloomberg) -- TI Fluid Systems Plc, a manufacturer of automotive fluid storage, is bracing for a shareholder rebellion at its first annual general meeting since it debuted on the London Stock Exchange in October.

The company, which is one of only 10 among the U.K.’s largest 350 public companies with an all-male board, is under fire for its lack of diversity, its relative lack of independent directors and its pay policy.

ISS, as the powerful shareholder advisory group Institutional Shareholder Services Inc. is known, has advised subscribers to vote against TI Fluid’s pay policy, which seeks to reward directors with bonuses of up to seven times their salaries. ISS said that’s far too generous. Unlike in the U.S., where shareholder votes on compensation are purely symbolic, in the U.K., the vote on pay is binding.

Private equity firm Bain Capital, which acquired the firm in 2015, holds a 65.9 percent stake, according to the annual report.

Chief Executive Officer William Kozyra’s pay of 29.9 million euros ($35.7 million) -- one of the highest reported in the U.K. so far this year -- included a conversion of pre-IPO shares he held, according to the annual report. Chief Financial Officer Timothy Knutson received 16.1 million euros, including a similar conversion.

ISS also notes that in addition to being an all-male group, two directors are company executives and another three aren’t considered independent because they each received bonuses of 340,909 euros in connection with the firm’s recent 1.3 billion pound ($1.7 billion) initial public offering.

TI didn’t respond to a request for comment, but in its annual report, the company said it intends to appoint additional independent directors “within a reasonable period of time.” On the issue of diversity, it said, “Candidates are considered on merit, taking account of their relevant skills and experience, as well as recognizing the benefits of boardroom diversity.”

Denise Wilson White, chief executive of the Hampton-Alexander Review, which has been campaigning in the U.K. for diversity on boards since 2011, laid some responsibility with the company’s advisers, who include Deutsche Bank AG and Goldman Sachs Group Inc.

“It’s surprising any company launching onto the FTSE 350 these days would consider doing so with an all-male board,” she said. “Surely corporate advisers should have counseled them better? However, I would expect investors are actively engaged on this already -- and prepared to vote against the relevant resolution at the forthcoming annual meeting.”

The Investment Association, which represents asset managers, last month wrote to a number of FTSE 350 companies including TI Fluid Systems, protesting against their lack of diversity. The Investment Association says it’s calling on companies to take swift action where they have low female representation at the leadership level.